The rise in demand of sukuk / Faid Abd. Rahmali

• Main Author: Abd. Rahmali, Faid
• Format: Student Project
• Language: English
• Published: 2013
• Subjects: Investment, capital formation, speculation; Bonds; Finance, Islamic
• Online Access: https://ir.uitm.edu.my/id/eprint/69161/1/69161.pdf; https://ir.uitm.edu.my/id/eprint/69161/

The demand for sukuk in Malaysia has been grown remarkably in the last couple of years since the first issuance in the early 1990s by a foreign owned non-Islamic company, Shell MDS, known as World's first ringgit sukuk. Up until now, sukuk had not shown any sign of slowing down except when it faces the global financial crisis. The study objective of this paper is going to foresee the rise in demand of sukuk issuance with the economics factors in Malaysian Capital Market. This paper will analyze three independent variables related to the rise in the demand of sukuk for the period 1990 to 2011. Whereby, it consists of (i) Gross Domestic Product (GDP), (ii) Foreign Exchange Rate (FOREX), and (iii) Market Liquidity (LIQ). Otherwise, the dependent variable would expect to be the growth rate of sukuk issuance. The methodology use is model estimation of ordinary least square regression method (OLS) by using multiple regressions. Thus, the results shows that sukuk issuance in Malaysia reckon only two variables consist of GDP and FOREX as major factor contribute to the rise in demand of sukuk. While, for market liquidity the result show slightly insignificant due to the liquidation of other Islamic products that give negative effect to the sukuk issuance likewise demand for commodity murabahah or tawarruq.